Healthy foods, healthy sales? Cross-category spillover effects of a reward program promoting sales of fruit and vegetables

Abstract

Introduction & BackgroundGlobally, consumption of Fruit and Vegetables (F&V) remains below nutritional guidelines. Marketing healthy products can be complex for retailers, and a key challenge is the design of strategies that benefit retailers, e.g., through improved loyalty, and deliver progress on societal goals.
 Objectives & ApproachThis study evaluates a point-plus-cash frequency reward program where participants received points by purchasing selected F&V, redeemable against a reward (plush toys in the shape of F&V). We estimate the impact of the program using a difference-in-difference-in-difference model, which compares expenditures in several categories before, during, and after the promotional period, across two different years, and separately for consumers who redeemed a reward and those who did not. Identification includes weighting for the propensity scores, and using an instrumental variable approach.
 Relevance to Digital FootprintsThe data refers to grocery expenditure in five categories in the focal retailer for over 268,000 consumers, over 27 weeks for 2 years, as recorded through their loyalty card.
 ResultsThe reward program significantly increased expenditures in F&V in the focal retailer during the promotional period. However, results differed depending on reward redemption. For reward-redeemers, the program increased expenditures in F&V as well as in other food categories, an effect that persisted – at a declining rate – after the program stopped. The program had a short-lived effect on non-rewards redeemers, who only increased F&V expenditures during the promotional period.
 Conclusions & ImplicationsResults indicate that a loyalty program promoting sales of F&V can create win-win benefits to both society and the retailer: it increases expenditures on healthy foods (F&V), while improving overall loyalty (i.e., expenditures) to the retailer.